Section 288 of the IT Act regulates the appearance by “authorized representatives” before any income-tax authority or the Appellate Tribunal. Subclause (viii) of the Explanation below Section 288(2), as amended by the Finance Act 2015, provides that a chartered accountant is eligible to be an “authorized representative” provided he is not “a person who, whether directly or indirectly, has business relationship with the assessee of such nature as may be prescribed”.

The CBDT has by Notification dated June 24, 2015 inserted Rule 51A, to define the nature of “business relationship” which is covered by sub-clause (viii) of Explanation below sub-section (2) of Section 288 of the Act. The expression “business relationship” has been construed as any transaction entered into for a commercial purpose, excluding –

  1. Commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm; and
  2. Commercial transactions which are in the ordinary course of business of the company and at arm’s length price